International Journal of Civil Engineering and Technology (IJCIET)

Volume 8, Issue 5, May 2017, pp.160–167, Article ID: IJCIET_08_05_019

Available online at http://iaeme.com/Home/issue/IJCIET?Volume=8&Issue=5
ISSN Print: 0976-6308 and ISSN Online: 0976-6316

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RISK MANAGEMENT IN CONSTRUCTION

EQUIPMENT
Sai Teja N
Under Graduate student, Department of civil engineering,
KL University, Andhra Pradesh, India.

Surya Anil Ch
Under Graduate student, Department of civil engineering,
KL University, Andhra Pradesh, India.

Afshan Sheikh
Assistant Professor; Department of civil engineering,
KL University, Andhra Pradesh, India.

ABSTRACT
Risk is defined as an unforeseen occurrence of action that causes adverse effect on
the project. It is involved in each and every business and construction industry is no
special case. The interest in infrastructure projects is going to be incredibly increased
in the coming future. Use of modern construction equipment and technology has
accelerated the growth. As the construction industry expands the risks associated with
it are also increased. To mitigate different types of risks such as safety, financial,
equipment, labour etc. different risk management plans should be developed. The aim
of this paper is to identify the risks, assess them and to determine the risk control
factors for construction equipment. They are determined through substantial
literature review and a questionnaire survey to make a basis for future studies to
monitor and review risk control measures.
Key words: Risk Management, Risk Assessing, Construction Equipment.

Cite this Article: Sai Teja N , Surya Anil Ch and Afshan Sheikh Risk Management in
Construction Equipment. International Journal of Civil Engineering and Technology,
8(5), 2017, pp. 160–167.
http://iaeme.com/Home/issue/IJCIET?Volume=8&Issue=5

1. INTRODUCTION
All construction equipment has the potential to cause problems in the construction site. If
failed to identify the risks associated with the use of equipment, every individual using that
piece of equipment will be at risk. Everyone utilizes the equipment to a greater or lesser

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 Risk Management in Construction Equipment

degree as a part of their work. Risk management plans should be developed with the use of
equipment. Construction equipment management is an important aspect of construction
project planning. The cost of this equipment may range from 30 to 40% of the total cost of a
construction project. As construction equipment contribute to the maximum percentage of the
work, the proper planning and selection of the equipment is essential to achieve construction
targets and to keep construction costs low. To make an effective and efficient risk
management it is necessary to have a proper and systematic methodology and, more
importantly, knowledge and experience of various types. For example, it requires knowledge
of the unexpected events that may occur during the execution of the project, on the actions
that work well or not when one of these events happens, on ways to assess a risk or estimate
the likelihood that it will occur, and so on. Equipment intensive projects are usually the very
ones that can prove great financial risks due to improper planning of costly equipment. Due to
these factors it is very essential for contractors to develop risk management plans and go
through effective planning of equipment.

2. OBJECTIVES AND SCOPE

The primary objective of this paper is to determine the risk control measures in construction
equipment. Initially the risks that are involved in the construction have been identified and
their extent is known through a questionnaire survey. Then primary risks that come up with
construction equipment have been identified through intensive literature survey. In this regard
the contribution of this paper relies on identifying and assessing the risks to determine the
risk control measures involved with equipment.

3. METHODOLOGY
This paper mainly deals with the ways to mitigate the risks in construction equipment. In
order to achieve this, a primary survey on various risks that contribute to construction and
their extent is known by preparing a questionnaire and having it surveyed in the major
construction sites by site engineers, supervisors, project engineers, executive engineers etc.
The risks that are involved in construction equipment are identified through intensive
literature survey. Assessment of these factors and the extent of them are obtained through
Risk Matrix. Further, to determine the management of these risks a case study is done by
considering a construction project and the equipment they use. After looking up the risks in
that, ways to mitigate them are regulated.

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 Sai Teja N , Surya Anil Ch and Afshan Sheikh

Identifying the risks

Questionnaire survey

Analyse through SPSS

software
Identifying risks in Construction
Equipment

Assessing risks through Risk Matrix

Case study

Results and conclusion

Figure 1 Flowchart representing research methodology

3.1. QUESTIONNAIRE SURVEY & ANALYSIS USING SPSS

Risks are a part of every field and construction field too has its effects. They can cause major
disasters, if risk management plans are not developed adequately. So to know the effect of
each risk in construction, a questionnaire is prepared which included various factors that
contribute to risk, like environmental, material, equipment, financial, scheduling, contracts
etc. Influence of each factor varied from very low to very high on likert scale and the options
are given as mentioned. On handing out the questionnaire in the construction sites, nearly 35
responses were obtained from construction managers, site engineers, contractors, architects.
These responses have been analysed using SPSS software. The pie-chart below represents the
impact of each factor that has on construction industry.

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 Risk Management in Construction Equipment

Figure 2 Impact of each risk factor

The results show that financial risk and equipment risk have contributed the most with 28.2 %
and 18.8 % respectively. The other factors such as political, scheduling, environmental
factors, site location, labour, material, ownership, engineering and design contribute to 5.6%,
5.6%, 3.7%,7.5%, 3.7%,9.4%, 3.7%,13.2% respectively So this paper mainly deals with
equipment risk and financial risk that is involved in equipment.

3.2 RISKS IN CONSTRUCTION EQUIPMENT

Construction equipment risks are generally overlooked, but needless to say they are one of
the key components in construction. The equipment market is valued at Rs.1,05,000 crores
alone whereas rest of the materials such as cement, bitumen, steel, bricks etc. combined value
at Rs.1,92,000 crores. Therefore, the risks associated with equipment are also more. With
intensive literature survey the various risk factors have been identified as follows:
• Unavailability of Skilled labour
• Maintenance Risk
• Financial Risk
• Labour Accidents
• Faulty equipment Risk
• Availability of spare parts

3.3 ASSESSMENT USING RISK MATRIX

A Risk Matrix is used to assess the risk in contemplation of determining the harm probability
category and harm severity category. The probability ranges from Rare to Almost certain and
the severity ranging from Insignificant to catastrophic with catastrophic being the highest.

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 Sai Teja N , Surya Anil Ch and Afshan Sheikh

Table 1 Risk Matrix

Insignificant Minor Moderate Major Catastrophic

Rare SP FE

Unlikely

Possible A

Likely L

Almost Certain M F

In the Risk MatricSP stands for Availability of spare parts risk, FE for Faulty Equipment
risk, A for Labour Accidents risks, L for Skilled labour risk, F for Financial Risk and M for
Maintenance risk.
Availability of spare parts, labour accidents and maintenance risks have moderate effect
when they occur. But the spare parts risk is rarely occurred, labour accidents have a
possibility of occurrence and maintenance risk is almost certain to happen. Skilled labour risk
can likely occur and will have a minor effect. Faulty equipment risk also rarely occurs but can
have major effect. Financial risk is very certain to happen and when it does, the effect is
catastrophic.

Table 2 Risk Mitigation Techniques

TYPE OF RISKS WAYS OF OCCURRENCE MITIGATING TECHNIQUES

• Improper intake of skilled labour Employment of skilled labour and

• Improper knowledge of handling imparting proper training to
Labour risk the equipment labour/operators.

• Wear and tear of the equipment
• Wrong usage of the equipment
Maintenance
• Improper servicing
Day to day check of the equipment
and maintaining a report, quality
servicing and quality check after
servicing.

• Shocks, high pressure Safety precautions like helmets and

environment, heat, vehicle gloves etc., introducing safety
Accidents overturning department which looks over the
safety of labour and equipment.

• Inbuilt fault of the equipment Inspection of the equipment before

Faulty equipment • Improper calibration buying or renting, test drives with
the equipment

Availability of spare • Unavailability/in sufficient Maintaining spare parts.

parts availability of spare parts

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 Risk Management in Construction Equipment

4. CASE STUDY
Among all the risks that are associated with construction equipment, financial risk is the most
troublesome one. It is almost certain to happen in every project and when it happens there
will be a huge loss to the firm. Financial risks can be subcategorized based on how they
occur. The type of procurement method adopted contributes significantly to financial risk.
The 3 basic procurement methods are
• Renting- Renting is a method of procurement in which the equipment can be
rented from a particular firm on a monthly or a weekly basis. Small scale
industries can be profited from this as the construction time can be less and the
cost of renting would be less. But in some cases the renting cost would be much
higher than leasing.
• Leasing- Leasing is another type of procurement method which is useful when the
equipment is used most of the time in a project. It has both the benefits of renting
and buying. Leasing is generally taken for a longer period of time. Sometimes
leasing can also bring losses if the equipment is not maintained properly as the
lessee is responsible for the equipment during the leasing period.
• Buying- An equipment is generally bought if the workload of the particular
equipment at the given site is more than 60%. It also depends on other factors such
as the due time of the next project for the firm, whether the firm is going to give
that equipment for a lease etc. but buying an equipment isn’t a bad option if the
money wasted on the lease is rather used to buy the equipment.
If the procurement method is not chosen carefully, serious loss can be occurred. To
cement this statement a case study of a medium scale construction project is carried out. The
details of the project were collected by consulting the project manager of the site. The firm
Sai Sudha Constructions has constructed a 6 storey residential building in Tadepalli area of
Guntur district, Andhra Pradesh. It took approximately 14 months for them to construct and
their next project is due in 3 months.
For this project the firm has used majorly four equipment.
• Excavators
• Concrete Mix truck
• Boom Cranes
• Tippers
The work load and the need of each equipment varied accordingly.

Table 3 Work load, need and procurement method of each equipment

Work Load Need Procurement type

Excavators (2) 12% Initial stage Rented
Concrete Mix truck(1) 80% Entire Project Leased
Boom Cranes(1) 25% Occasional Rented
Tippers(4) 60% Entire Project Leasing

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 Sai Teja N , Surya Anil Ch and Afshan Sheikh

5. RESULTS AND DISCUSSION

Since excavators and boom cranes were rented, the firm incurred no loss since these are used
only for a portion of the project execution. These equipment were rented on a monthly basis
or weekly basis when required. Whereas concrete mix trucks which had work 80% of the
time were taken for lease which caused a loss for them as they could have bought the
equipment which could have been used for the next project as it was due in 3 months. Regular
leasing can lead to a loss if the next project is near and if the equipment is used more than
60% of the time. Tippers were taken for lease on a yearly basis, which remained idle most of
the times. They were used only when the material was to be transported, and the excavated
material was to be taken away. Thus, it is better to rent tipperson a monthly basis.

6. CONCLUSION
The outcome of analysis from the study can be said to be of great relevance to the
construction industry. The survey findings indicated that equipment risk and financial risk are
crucial factors that needed to be considered. There are many factors that induce the risk in
equipment. The risk matrix helped in determining the risk probability and impact of each
factor. Financial risk can have catastrophic effect on equipment. However in this study the
factors are determined and the ways of mitigating the risks are also determined. Risk
Management plans should be developed in every construction project in order to ensure that
there are no losses to the firm. By taking a case study, financial risk mitigation that is
involved in procurement of an equipment is determined. Different scales of industries can
profit from different procurement method depending on their work load, current needs and
the due time of next project. For example, in a small scale industry most equipment such as
Concrete mix, cranes etc. can be rented and equipment such as vibrators etc. can be bought.
As the construction time is less. In the same way, for large scale industries which are never in
short of Projects can purchase equipment accordingly.

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